Two weeks after Maria, Puerto Ricans struggle to move money

The desperation in Puerto Rico for life's essentials — food, gas, water and electricity — in the wake of Hurricane Maria illustrates the need for payments providers to move as quickly as possible to get the U.S. territory in a position to reinstate some semblance of modern commerce.

As it is, major payments companies and financial institutions are finding the devastation on the island far beyond anything they have previously dealt with, and most efforts hinge on the availability of electricity.

The storm crashed into the island on Sept. 20, and reports about power restoration have varied. Some parts of the island have some power available, while other parts may wait months for electricity to be fully restored. Most recently, some cellular service has come back online.

A sign on the door of a grocery store reads "Only Cash" as people line up after Hurricane Maria in the Miramar neighborhood of San Juan, Puerto Rico, on Tuesday, Sept. 26, 2017.
Bloomberg News

To keep the island's economy running, the Fed has flown in cash one or two times a day to meet surging demand from banks, which have requested cash at as much as 700% above normal daily levels. Dispensing cash remains a problem without electricity to banks and ATMs, and many banks are working to get through long lines of cash-strapped customers.

Cash has grown in importance on an island in which card acceptance already isn't considered the norm for many small businesses. Either way, payments companies are waiting in the wings for the first indication that they can restore commerce for merchants and consumers on the island.

None of the major card brands responded to inquiries about what plans they have in place to support money movement on the island. Without power, there may be little they can do.

"You can't authorize payments because you are flying blind with no power," said Brian Riley, director of card services for Mercator Advisory Group. "Something like this brings you to your knees."

Some businesses can take card transactions on a limited basis with back-up power, but even those would run into transaction authorization issues, Riley added.

"I absolutely have never seen anything quite like this," said Riley, who lives in Florida and experienced Hurricane Irma just prior to Maria's assault on Puerto Rico.

Mobile point of sale provider CardFlight said last week it was going to work with Dynamics Payments, a provider of credit card payment and processing in Puerto Rico, to get merchants up and running as soon as possible.

CardFlight and Dynamics plan to waive monthly setup fees for the SwipeSimple mobile POS for businesses in affected areas, allowing them to take card payments through any mobile device or web browser.

As soon as cellular service is restored, pre-enrolled merchants will be able to start accepting transactions.

"Right now, cellular data is one of the only ways to stay connected," Aaron Rich, director of operations at Dynamics, said in a press release.

Other money transmitters are relying on mobile devices to be in operation, possibly before general electricity returns to the island.

“Natural disasters, like the ones Puerto Rico is dealing with now, have immediate and short-term negative effects to infrastructure," Erick Schneider, director of Latin America for WorldRemit, said in an email. "This complicates the receipt of funds sent from loved ones abroad trying to get help from banks and other correspondent partners that are destroyed, without electricity, or otherwise unavailable."

A key part of WorldRemit's strategy is to ensure a constantly expanding network of correspondent partners, Schneider said.

Even though its mobile-first, 100% digital model on the send side eliminates the need for the sender to travel to agents, WorldRemit and others like it still need a cellular system in operation for the mobile transfers to complete.

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One of the many concerns we voiced over the global brands' EMV policy of chip & choice was that US consumers would be denied many protections afforded to consumers outside the US. Issuers in the US were not required to support off-line PINs and authorization capabilities which would have enabled Puerto Ricans to use their cards when telecommunications were interrupted. We warned about the inevitable disaster but the brands were only focused on how to make things simpler for US issuers.